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Volatile Money Hurts Growth and Trade

The dollar-euro exchange rate has moved 20% eight times in a decade, causing crisis and stagnation.

By

James Kemp and

Sean Rushton

May 8, 2017 6:43 p.m. ET

It’s the most important price in the world: How many U.S. dollars does it take to buy one euro? The exchange rate between the two largest world currencies affects profits and financial conditions around the globe—and it has been dangerously unstable for more than a decade. Since 2007, the dollar-euro rate has swung up or down by about 20% no fewer than eight times. Exchange rates that gyrate this much produce crisis and weak economic growth, while undermining the case for free trade.